When commissions are paid periodically or the amounts fluctuate, the "bonus method" is used to determine the tax to deduct from the commission payment. See the article on "Bonuses and Retroactive Pay" in this newsletter.

Employees who earn commission with expenses:

When commissions are earned and the employee incurs expenses, the employee can elect to complete a TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions, in addition to the TD1.To calculate the amount of tax to deduct, use the Payroll Deductions Online Calculator (easiest), the computer formulas or the tax tables method.

Note
If an employee does not file aTD1X form, or revokes in writing-during the year-the election he or she made in completing the TD1X, the total claim amount from the employee's TD1 form is used.

Employees who claim employment expenses on their income tax return must have their employer complete Form T2200, Declaration of Conditions of Employment. For more information on when a T2200 is required, visit our previous blog article here.